HL Deb 15 November 2001 vol 628 cc763-90

House again in Committee on Clause 1.

Lord Howell of Guildford moved Amendment No. 18: Page 1, line 9, after "10," insert "other than Article 2, paragraph 12, revising Article 157(3) of the Treaty establishing the European Community,

The noble Lord said: The amendment brings our focus to Article 157 of the treaty establishing the European Community—not the Treaty on European Union. The article has been somewhat amended by the Nice treaty, raising a number of issues that give us cause for concern on these Benches.

Article 157 contains, and has contained from previous treaties, the injunction that the Community and the member states shall ensure that the conditions necessary for the competitiveness of the Community's industry exist—not the conditions for competition, which is a substantially different objective. There has been much rhetoric and many commitments on that. Various European summits and councils have pledged themselves to achieve a variety of aims for speeding up the adjustment of industry and promoting innovation, research, technological development and so on.

The other day, at an enlargement conference in central Europe, I heard one rather angry supporter of further integration demanding to know why the Lisbon agenda had not been achieved. Through my mind passed the thought that maybe it was not within the power of Ministers, gathered in a council or in any other way, to achieve the hugely bold commitments to innovation, to catching up the United States in high technology and the information revolution and generally to creating the impetus for innovation, which is the driving force of the economic process and the creation of wealth. Yet that was not understood.

I believe that that failure to understand drives deeply into the mentality of policy-makers, both in our respective member states and at the European institution level. It leads to a constant disappointment that governments cannot deliver the innovation impetus. They can do certain co-ordinating work—which they do—and very valuable work in research, and so on. But the basic driving forces of economic process are, of course, innovation, the anomalies and discoveries which create new opportunities and the drive of the wealth-creating process, whether in large or small firms.

The Government cannot do that. When governments try to do it, they find it difficult enough, except possibly in wartime. When governments try to do so at a supranational or even international level, the results are very small. In fact, in the case of the Lisbon declarations, they produce nothing at all.

What the Nice treaty does to Article 157 is to insist that: The Council, acting in accordance with the procedure referred to in Article 251 and after consulting the Economic and Social Committee, may decide on specific measures", and so on and so forth. Of course, it will come as no surprise to any of us that Article 251 is one that specifies that the Council will act by qualified majority voting. I am not quite clear whether that is a new QMV because it is in dark print in Article 157, although that is not the case in respect of Article 251, or whether that provision was present beforehand.

Either way, it is trying to push the machine in directions in which I do not believe that it will go. It is trying to do so with an impatience which demands QMV where the patience of unanimity had led to frustration. Perhaps the argument is that, if member states opt for QMV, magic will be achieved in innovation, promotion, and so on, in a way that did not happen with unanimity. Personally, I doubt very much that it will make the slightest difference, except that certain initiatives will be taken not by unanimity but probably by a qualified majority vote if things go wrong and one or two countries object. They, too, will probably lead to the same results as the unanimity provisions have led to, which is not very much at all.

The saving grace of Article 157, which perhaps leads one to be cautious as to whether to drop it altogether, is that the article contains—rather, there has been inserted in it by the Nice treaty—a reservation which is rather cheering if true. That reservation is that the, Title shall not provide a basis for the introduction by the Community of any measure which could lead to a distortion of competition"— that was in the previous treaty, and these are the new words— or contains tax provisions or provisions relating to the rights and interests of employed persons".

I wonder whether that is accurate. The interests of the employed person are, indeed, affected by certain articles of the treaty but perhaps not by this one. However, many employed people would say that their situation is very directly affected by articles of the treaty. I am a little puzzled as to how we can stand upright and say that that is so when it seems to conflict with common experience.

Amendment No. 19, which is grouped with this one, refers to Article 161 and concerns the task priorities, objectives and organisation of the structural funds. Here, the new black print states that from 1st January 2007, which is some way ahead, the Council shall act by a qualified majority on a proposal from the Commission after obtaining the assent of the European Parliament and after consulting the Economic and Social Committee and the Committee of the Regions"— there is plenty of work there to fill the time of those committees— if, by that date, the multiannual financial perspective applicable from 1 January 2007 and the Interinstitutional Agreement"— please do not blame me for the language— relating thereto have been adopted. If such is not the case, the procedure laid down by this paragraph shall apply from the date of their adoption". Frankly, that is obscure. It seems to me that QMV s are entering another area. I do not know whether or not that is a matter that should worry us. It is almost impossible to tell, but perhaps the Minister will bring his usual illumination and light to this particular complex clause and tell us what it is all about. I beg to move.

Lord Wallace of Saltaire

I rise briefly to say that I believe that both Articles 157 and 161 are good examples of political statements of policy which should not be in the treaty but should be part of the normal negotiation among governments. However, that is a question to which we shall return when we start to discuss the next inter-governmental conference and how one might then revise the treaty.

Given the conditions under which we are operating, it seems to me that the Government should be very happy with these two changes. One excludes the possibility of tax questions being introduced in relation to employment. The second will prevent some of the most self-interested member governments on the Cohesion Fund blocking the changes in that fund that are necessary to cope with enlargement. I say nothing about the Spanish Government in this respect. However, we are very conscious that this is precisely an area where QMV is definitely in the interests of the British and others who wish to see Community spending directed at those who need it and not at the vested interests who already have it.

Lord McIntosh of Haringey

I am disappointed that the noble Lord, Lord Howell, should be so defeatist. I can understand that it is legitimate to question whether the European Union can have effect at some height above in Brussels on industrial policy. However, he goes further. He is suggesting that it is beyond the competence of the United Kingdom Government to help industry. I simply do not believe that. I consider that the experience of the past four-and-a-half years is that we have been successful in helping industry, both in terms of deregulation and, above all, in the way in which we have provided an economic climate of stability for industry.

As the noble Lord speaks so much about small and medium-sized enterprises, perhaps I may reiterate that, having run a small and medium-sized enterprise—smaller rather than medium, I believe—for 30 years, I should have much appreciated the degree of stability which has existed since I left it and joined government.

Article 157 allows the Community to take cooperative action; in other words, it involves measures that support the actions taken in member states. That is my answer to the noble Lord, Lord Wallace, who said that the provision should not be in the treaty. In the sense that he meant it, it is not in the treaty. The provision relates to the support of member state action to increase the openness and competitiveness of industrial markets. In view of the contributions of the noble Lords, Lord Wallace and Lord Howell, I really cannot see what objection there can be about such support.

The noble Lord, Lord Howell, was right—new paragraph (3), which was agreed at Nice, changes the article's requirements from unanimity to qualified majority voting. We agree with that; we supported and encouraged it and it is in our interest to have QMV for industrial policy. It will help to further the Lisbon economic reform agenda and to increase competition. I wonder whether the Conservative Party disagrees with those objectives. In case the issue should arise, we ensured that there was a carve-out from the article to protect measures involving taxation or the rights and interests of employed persons.

Amendment No. 19 refers to Article 161, which determines how structural and cohesion funds are allocated and managed. The answer is that the amount of structural and cohesion funds is set by unanimity but that the distribution of those funds will be determined by QMV. Again, that seems to us to be entirely right. The amount that the funds contain is agreed by the European Council by unanimity within the six-yearly financial perspective. The current financial perspective runs out in 2006.

The new final paragraph to which the noble Lord referred was agreed at Nice and moves the article relating to QMV from 2007; that is, after the next perspective or, if no agreement is reached by then on the next financial perspective, following that decision. Surely it is right that one member state should not be able to hold a necessary, fair and worthwhile allocation of structural funds to ransom. The noble Lord, Lord Wallace, referred tactfully to that; I shall not mention any member states.

QMV will mean that a fairer deal is negotiated for everybody. No one will be able to veto in order to hold out for an unfair share. In summary, the overall amounts of money spent on structural funds will continue to be decided by the European Council when it sets the financial perspective. On unanimity, it is right that the distribution of those funds should be subject to QMV; in other words, subject to Article 251.

Lord Biffen

I intervene briefly primarily to say how much I appreciate the Minister's kind words about G. C. Coulson, the great Protestant historian. I never thought that such an opportunity would fall my way, least of all in debates upon the European Union. It just shows that there are small nuggets to be mined even in the most unpromising of circumstances.

At this stage of the evening, one begins to bewail absent guests or absent performers. I much regret the absence of the noble Lord, Lord Hannay, who is not here to put the succinct explanation of government policy that so often eludes the ministerial Front Bench; but there we are. They may still be working at the Quai d'Orsay but at least the hours are more civilised at the Foreign Office.

My other regret involves the absence of any spectre from the Treasury. At the end of the day, this is very much a Treasury matter. We are being asked to put into the legislation a proposal that is not really very necessary. I am delighted to have the support of the noble Lord, Lord Wallace, on that point. I cannot believe that the economic directions of Community policy would be in any sense prejudiced if the proposal were not written into the treaty. I say that because on the whole, although the EU, which originally by nomenclature was the Common Market, had a strong free trade emphasis (a classical liberal emphasis) on the destruction of tariffs—although it also preserved a more protective arrangement for agriculture—we are inevitably learning that the high noon of free trade may be passing. That is the case despite the Statement earlier today about the World Trade Organisation. I suspect that even there we are moving towards guided trade rather than open trade.

In this situation one wants as little formal commitment as possible. The formal commitment in Article 17 will be seized on by those driving for greater Community expenditure, for the reality is that the treaty postulates membership that I believe will substantially transform the character of the European Union—not least by virtue of the great gap in living standards between the applicant countries and the existing membership.

That will give rise to constant pressure for a transfer of resources within the European Union to offset that material disadvantage. But, also, that is likely to take place against the disciplines of the single currency. I shall not enter the guessing game about the consequences of the single currency, but there is respectable opinion—not merely that of so-called Eurosceptics—that says that the single currency will result in a substantial redistribution of wealth within the Community. If that is so, all the pressure will again be to try to use public spending as a way out—or at least as some kind of emollient—of the situation.

I say to the House that we cheerfully, or with a certain amount of regret or cynicism, pass such legislation, all of which is setting the disciplines for substantial pressures on European Union public spending. At the end of the day, that public spending will be good old-fashioned pork barrel spending, in which various countries will be trading off to get advantages, knowing perfectly well that the Irish have demonstrated what can be done in that direction. As someone who has spent his life being on the whole mildly, but not excessively, critical about levels of public spending, what is damaging is not so much the total volume but the quality of public spending, because it becomes highly politicised and less and less relevant to trying to remedy those things that should be countered by a collective attitude.

9.15 p.m.

Lord McIntosh of Haringey

I am tempted to rise again, first, because I very much appreciated what the noble Lord, Lord Biffen, said about Coulson, the Remote and ineffectual Don That dared attack my Chesterton". Perhaps we should go out to recite the poem at considerable length in public. As I said, it is one of the finest pieces of literary invective that I have ever known.

I also have sympathy with what the noble Lord said about the multinational direction of industry, but that is not what Article 157 provides. Article 157 concerns co-operative action; it is about action in support of action taken by member states. If the noble Lord wants evidence of how that can work in practice, it was demonstrated earlier this afternoon. My noble friend Lady Symons then described how a way forward had been found at Doha that had not been found at Seattle to promote liberalisation of international trade in which it was the European Union, acting as a whole, that succeeded in breaking some of the log-jams that had arisen at Seattle. That is worth doing and is encouraged by not just this treaty but by all the treaties of the European Union.

Lord Howell of Guildford

I apologise to the Committee—I seem to have started something with my adjectives "remote" and "ineffectual". Perhaps we can discuss them further at another time and I shall certainly read the full poem according to the Minister's injunction.

Lord McIntosh of Haringey

Enjoy the recital!

Lord Howell of Guildford

The reference that the Minister has just made to the work of the noble Baroness, Lady Symons, in the successful operation—so we hear—at Doha is a good example of where consultation and co-operation between as many of a group as one can get together—in that case the European Union group—clearly makes sense. However, the article is not about that, as my noble friend Lord Biffen said; it is about support for various perfectly commendable objectives—favourable environment, policies of innovation and research, and so on—but the issue is how those objectives are to be achieved. Are they to be achieved by a competitive, low-tax environment in the nation state, favourable to enterprise, initiative, investment and innovation, or are they to be an addition to be achieved by support from the European institutional level?

There is the apocryphal story of the boy scout who insists on helping a senior citizen across the road only to discover on reaching the other side that she did not want to cross it in first place.

I sometimes feel that some of this "wished-on-us" support coming from the European institutions over and above our national methods, over and above an appropriate degree of concertation and co-operation, is something that costs, but does not necessarily add value. One is entitled to look critically at the long lists of proposals supporting this and supporting that at Community level in ways which may not add value to the existing situation.

Lord McIntosh of Haringey

Is the noble Lord, Lord Howell, repudiating the structural fund? We are talking here about £,10 billion of structural fund money coming to the United Kingdom between 2000 and 2006. We are talking about Objective 1 funding going to Merseyside, to South Yorkshire, Cornwall, West Wales and the Valleys. Conservative Members of Parliament in those areas, if there are any left, will not thank the noble Lord.

Lord Howell of Guildford

The noble Lord is premature. I am talking about Article 157. I have not yet come on to the structural and cohesion funds. I shall say a word about those in a moment. The Minister is taking several jumps ahead of what I am saying.

I am referring to Article 157 and questioning some of the costly and often ineffective support programmes which tend to be fifth wheels on the coach of sensible industrial and tax policies conceived at national levels.

The noble Lord tempts me to turn to Article 161 and the structural and cohesion funds. I am not saying what he thinks I am saying; I am interested that these matters are to be handled in a different way after 2007 and that there will be a fair distribution of the funds. The figures he mentioned are very large.

We must bear in mind, of course, that if all goes according to plan 2007 will be a time when there are more like 25 members of the European Union rather than 15. The new 10 will have a GNP per head of around one-quarter of the existing 15 and the clamour for their fair share of the structural and cohesion funds will be extremely loud. The need to ensure that the system is fair and that the weighting of votes is not always balanced in favour of the big boys or the existing members will be very important. I do not say that that cannot be achieved. But we shall have to watch very carefully indeed that fairness is perceived to exist by the 10 new applicants.

Already voices can be heard both in the western end of the existing Union and in the central and eastern end of what will be the larger Union which are in contradiction to each other, each side saying it is they who should get the "fair" share in the distribution of the structural and cohesion funds.

So these are serious issues, not to be turned into a party football bouncing me or anyone else into saying that we do not applaud the use of the funds when properly applied. They have no doubt brought benefit to many parts of the United Kingdom as well as to other parts of Europe. But a serious point arises here. If qualified majority voting is in operation after 2007 in this new enlarged Community of 25 plus, and maybe more, we must expect a few sparks to fly as people work out what is and what is not fair.

Those are matters for further debate, not to be pressed further now. Therefore, in the light of some of the explanations given by the Minister, and in the light of other comments in this debate, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 19 not moved.]

Lord Howell of Guildford moved Amendment No. 20: Page 1, line 9, after "10," insert "other than Article 2, paragraph 15, revising Article 175 (2) of the Treaty establishing the European Community.

The noble Lord said: We turn now to Article 175 in the TEC—not the TEU—which again gives some cause for concern to those of us who are anxious that the Community and its institutions should concentrate on what they are good at and what adds value, and not be distracted into other areas where nation states, regions and smaller, more sensitive bodies—closer to the front line, as it were—may be more effective. The particular points which catch our eye are those in black type, which means that they have been introduced by the Nice Treaty to the existing corpus of treaty legislation.

What we have here are propositions that the council shall decide what action is to be taken by the Community in order to achieve a number of objectives already in the treaty under Article 154. They include protecting human welfare, prudent utilisation of natural resources, and promotion at an international level to deal with regional, worldwide and environmental problems. One could not object to any of those points for a moment. They are obviously to the public good if they can be achieved.

Then we have measures primarily of a fiscal nature—that was already in the treaty—measures affecting town and country planning; quantitative management of water resources affecting directly or indirectly the availability of those resources. Anyone can see that management of gigantic rivers necessarily needs to be concerted transnationally as it is for the river Rhine and across other borders throughout the Community. Indeed, one little known area of transnational co-operation is that by the River Foyle Authority between Northern Ireland and the Republic. That kind of co-operation between authorities which are able to operate transnationally can work perfectly well. I am not totally clear as to why we now need new measures to bring the Community so firmly in on the act. There may be points which I have missed. If so, I am sure the noble Lord will put me right. However, the extension of the competencies into management of water resources seems, once again, to be a development where subsidiarity has been forgotten.

In this case were the rules followed for testing whether something should be put to the process of subsidiarity—such rules are often neglected but were originally in one of the earlier treaties—or did we just leap without hesitation into quantitative management of water resources and town and country planning, although I believe that already existed? What has happened to the idea of subsidiarity? Why is it not being promoted right through the treaty at every point? Why is not there a tone of the Community saying, "We will stick to what we can do in terms of rules and regulations. We have reached right across the Community to where we really can be a valuable support to the nation states and to the industries and citizens within them but on other matters we will, indeed, either not intrude or", better still—I realise this is asking for the moon—"unravel the commitments centrally which were suitable in a previous age but in the age of information revolution and high technology in which we now live can perfectly well be managed on a smaller scale at a further range from the centre"?

Why are not those principles asserted in the new text? What happened at Nice that people forgot about subsidiarity and, instead, proposed new centrality, if that is the opposite of subsidiarity? We would like to know the answer to that question. That is the purpose of the amendment. I beg to move.

Lord Willoughby de Broke

I rise briefly to support my noble friend's amendment. It seems extraordinary that subsidiarity seems to have disappeared from this article, and I wondered why. My noble friend gave examples of intergovernmental co-operation, which seemed to work perfectly satisfactorily. I wonder why such examples are not followed more frequently in the European Union, rather than trying to operate them centrally. Here we have town and country planning and the quantitative management of water resources.

I see that the noble Lord, Lord Williamson, is in his place. When he gave evidence to the European Select Committee he said that he thought that the Commission was trying to do far too much with things it should not mess with. He gave the example that amused me of giving prizes at a melon festival in Cavaillon. The management of town and country planning is one level up from that. There is also the quantitative management of water resources, which can be anything from winding a lock on a canal in Warwickshire to deciding the river flows on the Rhine, land used with the exception of waste management, and so on.

Again, it appears that the Commission is trying to make decisions that should be taken at a national level. Can the Minister explain why these provisions are here and why such matters cannot be achieved on an intergovernmental basis? Why is it necessary for quantitative management of water resources to be in the treaty? Is that a significant factor in enlargement? Perhaps the acceding countries will benefit from the high quality management that the Commission and the Council of Ministers can bring to bear on their water resources.

I look forward to hearing what the Minister has to say about that. Meanwhile, if my noble friend decides to press this amendment to a vote I shall support him.

Lord Stoddart of Swindon

I support this amendment. I too am concerned about subsidiarity. I remember discussing the Maastricht treaty. In this House we had 11 days of debate on the Maastricht treaty and we examined it fairly thoroughly. We were assured that the Maastricht treaty was good for Britain because some powers would be returned. We were promised that. The noble Lords, Lord Willoughby de Broke and Lord Pearson, were involved in those debates. I am sure that they will confirm that we were promised a return of powers that we had lost and that subsidiarity would give us game, set and match. Do noble Lords remember that? It was Mr Major's game, set and match. Unfortunately, it was not game, set and match, but a sell-out in exactly the same way as we have been sold out so many times.

Perhaps my noble friend can tell me how many measures of subsidiarity have been put into operation since 1992 when we ratified the Maastricht treaty. I also want to know exactly what water resources have to do with the Community. My own experience tells me that when bigger and bigger organisations interfere with issues like water resources they make matters worse.

When I was leader of Reading county borough council, a nationalisation measure came into being to bring the water companies and the water boards of Berkshire and south Oxfordshire into one board. It was a local board and worked successfully until the Metropolitan Water Board stepped in. The board said that in order to manage its own water throughout the Thames Valley and into the Thames basin, it needed to extract water from the Thames and the Kennet valleys, water that we have enjoyed from the green sands and the chalk for many hundreds of years. That board took out the beautiful, clean, sweet water and pumped it into the Thames where it became dirty. The water then travelled down to London and other places where it was extracted and the board had to clean it. The damage that that did to the wildlife and to the rivers of the Thames Valley and the Kennet Valley has to be seen to be believed.

Lord Watson of Richmond

The noble Lord asked rhetorically what should the EU have to do with water. Perhaps I may point out to the Committee that the EU intervention in the flow of polluted water on to the beaches of Britain, for example, has been one of the great pluses of the European experience in recent years. The reports on the new clean beaches of Blackpool were most reassuring and a confirmation of the efficacy of Europe in the matter of water.

Lord Stoddart of Swindon

The noble Lord thinks that he has made a very good point—

Noble Lords

He has!

Lord Stoddart of Swindon

I simply do not agree with him. It was not necessary to become members of the European Union or the Common Market in order to clean up our beaches. We had the opportunity to do so ourselves. Indeed, we have done it ourselves and we have paid for it ourselves. We have paid for it very highly ourselves! Therefore, the noble Lord cannot say that because we are members of the European Community we have had our beaches cleaned. The beaches have been cleaned because the British water consumers and taxpayers have paid for new sewage works, which could have been and would have been built without our membership of the European Community.

In order to have good, clean water and beaches, it is not necessary to deal with it on a Community-wide basis. After all, we developed our water resources, our river basins and our sewage works over a long period of time without help from anyone else. Indeed, the great dams and sewage works which were built by the Victorians are evidence of that and we can see them every day. Therefore, I do not know why on earth the EU needs have any input into the way we provide water in this country.

I am tempted to talk about electricity because at one time I worked in a power station and was a member of the electricity industry's national joint council. I do not see why the EU should be involved, but that is another matter. I am sure we want to get on and I look forward to the noble Lord's reply.

Lord McIntosh of Haringey

I have a self-denying ordinance; I like to talk about the Bill and about the amendment before us rather than other matters. But I must say that I am sorely tempted by my noble friend Lord Stoddart. He may not realise that 35 years ago I was a member of the Metropolitan Water Board—

Lord Stoddart of Swindon

Shame!

Lord McIntosh of Haringey

My noble friend despises it so much. We were the wicked big brothers down the river who destroyed the good, clean water from the green sand of the Thames Valley.

Lord Stoddart of Swindon

You did!

Lord McIntosh of Haringey

I believe that my noble friend was right and we were wrong, but I do not believe that that applies to the European Union. If ever there were an issue which crosses national boundaries, surely it is pollution. It is the environment. If ever there were an issue which can be dealt with better by multinational, collaborative action across a whole continent, it is the environment. I am sure that everyone will agree with that. I cannot believe that there can be any disagreement.

Pollution does not respect national borders. It may to some extent respect the English Channel and the North Sea, but in Europe as a whole, clearly it does not respect national borders. Look at the Danube——

Lord Pearson of Rannoch

Why cannot there be intergovernmental collaboration? Why does one need the absurd and destructive paraphernalia of the European Union to clean up our water? It simply does not make sense.

Lord McIntosh of Haringey

It did not happen.

Lord Pearson of Rannoch

It did and, incidentally, at a cost of £40,000 million.

Lord McIntosh of Haringey

I do not get a word in edgeways here! The answer is that it did not happen. I admit that that may be because no one had ever thought of it at that time. The original Treaty of Rome did not refer to environmental protection and our awareness for such need has grown over the years and grown properly.

Perhaps I may finish the sentence I began before the noble Lord, Lord Pearson, so politely interrupted. The waters of the Danube flow through many existing and future EU member states. It is true of the Rhine and of a very large number of what are called "water resources". It is precisely in these areas that we need common standards and rigorous procedures. The answer to the noble Lords, Lord Pearson, Lord Stoddart and Lord Willoughby, is that we are following this course because it did not happen before and there is no other way.

Consciousness of the impact that the EU can make on environmental protection has grown as we have become aware of the need for tough action on that subject.

Baroness Park of Monmouth

Will the noble Lord allow me to intervene to say that one of the problems is that the theory is there but not always the fact? I remember that when we were discussing beaches we were shown a map and every blue flag on it indicated a good beach. A red flag showed a bad one. We were shown a map of Italy at the time. Every single flag was blue except one, which was for the Bay of Naples which nobody could possibly pretend was not polluted. So the theory is there, but it does not necessarily work.

Lord McIntosh of Haringey

Is it suggested that environmental protection would work better by being returned to national rather than international control? I cannot believe that the noble Baroness, who is so well informed about these things, can believe that.

We moved over to QMV, it not having been present in the Treaty of Rome, in the single European Act and in Maastricht. All of that was carried out by Conservative governments. There is now a large measure of support from the citizens of Europe for action at a European level. Until hearing the strange debate this evening I should have thought that that was something with which everyone would agree.

Environmental protection is not an area in which we can afford to have common standards at the level of the member state least willing to clean up its act. I believe that that is what we would finish up with. Environmental standards have to be demanding as well as achievable. That is why most of the environmental provisions in the treaties are already subject to qualified majority voting.

Again, I have to disappoint the supporters of the Nice Treaty because I have to admit that it makes very minor adjustments to these provisions. They are good adjustments and I am surprised that anyone should oppose them. The one area which moved to QMV in this article is water quality. It is not a new competence, but the use of QMV is.

Perhaps I may explain why I believe that that is right and where the logical objection to new QMV, whatever the reason—although not expressed in this House, but by the Opposition in another place— would actually harm Britain's interests. Water quality affects us all whether we are at home or visitors elsewhere in the EU. British companies need a level playing field on which to work. Why should others gain a competitive advantage by being able to meet less high standards of environmental protection? Qualified majority voting will prevent any member state lagging behind from keeping the standards below an acceptable level.

There is also a perverse peculiarity in these amendments because Article 175 returns one of the aspects, which is land use, to unanimity of voting from QMV. The measures of a general nature on land use were part of a carve out which made them subject to QMV. That has been deleted because it was believed to be too vague and it will now be subject to unanimity. I did not hear the noble Lord, Lord Howell, or anyone else objecting to that change.

The article on environmental measures is an excellent example of how at Nice we followed the rule on QMV which we have always followed; namely, to examine proposals for extension, and in this case for reduction, on their merits. Where we see advantage for Britain and efficiency, we shall agree with them as we have done here. Where we judge that there is a fundamental national interest which requires that we retain the veto, we shall not agree to QMV. In this article we do not agree that QMV should be extended to taxation measures—nor has it been.

To set ourselves the standards required to guarantee environmental protection we need to use QMV and encourage those lagging behind to bring their standards up to an acceptable level. Without that, we all sink to the level of the polluters. We support these changes. The Government argued strongly for these measures and I hope that the Committee will not reject them.

9.45 p.m.

Lord Willoughby de Broke

I did not want to interrupt the noble Lord. However, the Minister kept referring to qualitative management, whereas the article makes reference to quantitative management. Is there any difference?

Lord McIntosh of Haringey

I was not conscious that I used the word "qualitative" once. I spoke about water quality, which is one thing. Quantitative management of water resources means that there is enough water. Surely, that is equally an issue that does not respect national boundaries.

Lord Biffen

The Minister quoted management of the Danube, which is obviously appropriate in the context of European enlargement. In what way does he believe that the existing management of the Danube by the riparian nations is inadequate and would be enhanced as a result of the changes now proposed? I ask that question because I cannot believe that the noble Lord would have introduced that example without having evidence to support it.

Lord McIntosh of Haringey

The Danube is very peculiar in that it flows partly through the EU. It starts in southern Germany, as the noble Lord is aware, and flows partly through applicant states such as Hungary. It also forms a national boundary between applicant states—Hungary and the former Republic of Yugoslavia—and flows partly through states such as Romania and Bulgaria which are not at the moment applicant states. At the present time there is no prospect of water quality standards being applied to the whole of the Danube, but where we have control we can ensure that no pollution is being imposed by a state higher up the river on states lower down. That is what it is all about—and always has been.

Lord Pearson of Rannoch

Perhaps I may pursue a point raised by my noble friend Lady Park. Some time ago my noble friend and I sat on the same committee of this House which considered the progress of the water directives. Can the Minister give the Committee an assurance that other nations of Europe treat their water—I refer not only to beaches but rivers—with the same care and attention as we do? In Europe it is said that the only major city in the European Union which still discharges raw sewage into its local river, in this case the Meuse, is Brussels. Can the Minister give the Committee an assurance that other countries fulfil this glorious European policy when many of us believe that it can be done by intergovernmental collaboration; and that the Belgians are spending the same amount of money proportionately as the UK on these important matters?

Lord McIntosh of Haringey

Of course I cannot, and that is utterly irrelevant to the debate this evening. It is not part of the case to have multi-national responsibility to deal with the environment that we must be the best, or indeed the worst. It is some time since the Mersey caught fire because of the degree of pollution. I do not know about the rivers in Brussels, and it is not necessary that I should. What we must do is all act together.

Baroness Nicholson of Winterbourne

The noble Lord committed a very minor lapsus linguae. Romania and Bulgaria are applicant states. This gives me the opportunity to place on record the excellent treatment of the Danube undertaken by Romania, which in part is funded by the European Union.

Lord McIntosh of Haringey

The noble Baroness is quite right, but those nations are not in the next round. I did not in any sense criticise the way in which states on the Danube, or any state, dealt with environmental pollution. I make the point that many of these matters do not respect national boundaries, and the Danube is a very good example of that.

Lord Howell of Guildford

I am grateful to the noble Lord. In his earlier summing-up he made an impassioned case for a point which I thought that I had not only conceded but had heartily agreed with in my opening remarks; namely, that in the handling of the water resources of the great watercourses and rivers of Europe, trans-national co-operation of the most intimate kind is required. That can be done under EU auspices, with EU finance, or, as the noble Baroness, Lady Nicholson, reminded us, with EU assistance but actually outside the immediate purview of the Community and the treaty laws by which it is guided.

The noble Baroness mentioned the Romanian management of the Danube. Another example is the way that Slovakia and Hungary have sorted out immense problems over the handling of Danube waters. These things can be done by immediate bilateral alliances or by going to supranational authorities, or the European Union where that is relevant.

That makes my point. The management of water resources can obviously be handled on the big scale by large organisations spreading across sometimes many countries. In-between that and the ordinary every day hedging and ditching, which, if not done in a local community, may lead to most uncomfortable village flooding or the empty village pond for three years running, there is a vast area where it is highly questionable whether the grandeur of Community provisions and undertakings to make provisions, admittedly by unanimity—I concede that—for the quantitative management of water resources are of the slightest relevance.

The Minister spoke about the Danube. I have spoken about the Rhine. What about the River Test—to take a rather well-known river in the middle of our country? It has many problems with flooding, water control, quantitative management, and so on. Do we really need to have this all-embracing proposal, whether by unanimity or by qualified majority voting, which it is not at the moment, at Community level—more remote, I use that adjective again—to put right our local and very intimate levels of miserable flooding last winter. There are signs of more miserable flooding this winter. The summer before there was serious drought and empty riverbeds. These require the most vigorous and detailed national programmes. I cannot honestly see where the Community comes into them. So there is a kind of failure of perception here that runs through many parts of the eagerness of the Community to take an active part in things.

There are a whole range of problems, particularly environmental problems, that are better dealt with either at national level or at mixed national and Community level or even at regional and local authority level. One needs to be flexible. To create a pattern where the activism of the Community and its institutions sits like a teapot cover over the entire system introduces a rigidity where that is not needed. Indeed, on the contrary, enormous flexibility is needed.

So some pollution is trans-national, some is national and some is local. We need to be ready to address these matters at all levels and to take great care before tying ourselves into one formula or another. At the most local level the best anti-pollution level is for everyone in our cities or anywhere else to sweep their front doorstep and to make sure that the immediate surroundings to their property are clean. I hope that we do not need a European directive or a Community provision to tell us to do that.

Lord McIntosh of Haringey

Can I say four words: "Of course we don't".

Lord Howell of Guildford

I am very glad for that reassurance. I am not so sure that it was so generous that it leads me to a total withdrawal of these amendments. I suspect that we shall want to return to aspects of this intrusiveness on Report. Nevertheless, the hour is late. In the light of that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Howell of Guildford moved Amendment No. 21: Page 1, line 9, after " 10," insert "other than Article 2, paragraph 19, revising Article 191 of the Treaty establishing the European Community,

The noble Lord said: We come now to a very sensitive issue on which we shall need a considerable amount of discussion. The amendment addresses European funding for political parties at the European level. The relevant article in the TEC is number 191, although other aspects are also affected. Other amendments in the grouping also refer to political parties in Declaration 11, which is important and to which I shall turn in a moment. Amendment No. 41 seeks to insert a new clause which I hope will prove to be completely non-controversial and thus will receive widespread support.

To be frank, Article 191 is very controversial. It was controversial in its previous form, but with the additions it has become even more so. Previously it stated merely that political parties at the European level are, important as a factor for integration within the Union". I am not sure that that is the case. It also asserted that they, contribute to forming a European awareness and to expressing the political will of the citizens of the Union". I think that that is a snark-like hunt. There is no European collective identity and awareness in the political sense as it is understood in democratic politics. We are proud to be Europeans; that is fair enough. However, when referring to "awareness" people think in terms of smaller units. I do not believe that there is either a mechanism for achieving, or, indeed, a goal to be achieved, as regards a form of grand political will embracing all the citizens of the European Union. I refer to the present Union of some 350 million souls, let alone the larger one of 450 million people that lies ahead.

The very concept of a political will being expressed by such an enormous number of people worries me as a democrat. It should worry all those who are anxious to maintain the thread of legitimacy stretching from the grass roots—the roots are in fact the masters; the citizens who cast their votes—right down to their servants: the officials and elected members of the governments and institutions of the European Union. That is the position even before I refer to the Nice treaty.

I turn now to the new addition: The Council, acting in accordance with the procedure referred to in Article 251"— which relates to qualified majority voting— shall lay down the regulations governing political parties at European level and in particular the rules regarding their funding". We shall want to learn a great deal more about that procedure.

The handling of funds for political parties is a matter to which politicians of this nation have given considerable attention, and properly so. We have achieved that by means of robust and democratic debate. I hope that over the years we have developed systems that are better, more transparent, more upright and more commanding of the trust and faith of the electorate. I dare say that we have further to go, but much has been done.

Along comes the Council of Ministers, which out of the budget of the European Communities seeks to take funds which the Declaration, which is also on the Order Paper, states, may not be used to fund either directly or indirectly political parties at national level". That will be extremely difficult to police. We shall need to learn an enormous amount as regards how that policing is to take place and how a distinction is to be made between European parties operating at European level and European parties operating within nation states—in which, after all, we live—and encouraging European awareness, as it is called, within the nation state. However, this is not so that they can say they are national parties promoting a national party cause. Frankly, I do not see how it is going to work. Presumably it can be made to work, but it will be extremely difficult. Perhaps the Minister can make me better informed. Is it 7 million euros or something like that? It is not much in the great rolling budgets of the Community—or, indeed, in our nation state budgets, which are enormous—but it is a lot of money in the hands of political parties and those who are out to express the will of the citizens of the Union.

Let us get down to brass tacks. It will be said—not by the Minister because he is a generous and broad-minded man—that this is only because the Conservative Party in the United Kingdom is not one of the parties out to express the political will of the citizens of the Union. However, over the years, this party has done more than its fair share of expressing the political will of people throughout the whole of Europe who want to unite. One could go back to the Council of Europe, Lord Kilmuir and other antecedents to assert our credentials. But because this is not a transnational party with the same name popping up in different countries, we do not qualify. It may be said that that is our bad luck; that we should redesign our arrangements so that we do qualify. But in the meantime we do not.

I have never been an enthusiast of state funding or, indeed—dare I say it—of large sums of money coming from particular sources. Political parties should be funded as far as possible by the modest savings of as many people as the political party can command the support of. That is the best source of funding. Party treasurers in my party will shoot me for saying that, but that is my feeling about where political funds should come from. I do not like great big blocks of money; I do not very much like state contributions, although they are perhaps inevitable in many countries; least of all do I like these matters being settled far away at the European level in accordance with some very vague criteria. It is all to do with political will—which I have asserted does not exist— and with the citizens of the Union, which we all are. That is perfectly true.

I hope that we will hear a lot more about how this will work. We note the declaration that this funding will be kept away from political parties at national level, but we would like to see the matter much better aired. That is why we seek to insert a new clause after Clause 3 which requires that an annual report be laid before Parliament, setting out the funds received by political parties at European level of which political parties represented in the United Kingdom are members, pursuant to Article 2, paragraph 19 of the Treaty of Nice".

The amendment is needed to show that these funds are being allocated in a non-discriminatory way and are not being misused or leaking through into purposes for which they are not intended. We will want to know how the parties who receive them will be accountable for the funds concerned and that their arrangements and expenditures will be fully transparent, and we shall want to know a whole lot more besides.

I am sure that the Government are as anxious as we are that the matter should be clean and above board in every possible way. I am sure that the other governments of Europe are too. Although we cannot amend the treaty, we can encourage our own Government to give an excellent example and a lead. I hope that is what they will do by at least accepting Amendment No. 41, the new clause, and recognising the validity of our arguments in regard to Amendments Nos. 21 and 36. I beg to move.

10 p.m.

Lord Wallace of Saltaire

It is no secret that my party is in favour of additional state funding of political parties. Provided that there is a proper, transparent scheme for ensuring accountability, we believe it is a better means of supporting political parties than relying on eccentric millionaires. After all, the three largest donors to the Conservative Party at the last election accounted for precisely the same amount the noble Lord quoted as the European Union provides for funding of political parties at the European level.

We therefore have a great deal of sympathy for Amendment No 41, because it provides for proper transparency. But we recognise that the purposes of these amendments to the treaty were to regularise a situation in which a certain amount of money was flowing to political parties represented in the European Parliament for their transnational activities and that it ought properly to be regularised in the treaties.

There is a problem of democratic accountability at the European level. In our opinion, it helps to promote a more open, democratic debate if we encourage contacts among political parties across borders between like-minded parties in different countries. This is a contribution to that and, therefore, we are in favour of the principle of some support for European-level political parties. We are, however, extremely concerned about accountability; therefore, we support both the regularisation and the idea that there should be careful accounting and reporting from the British Government, as Amendment No. 41 suggests.

Lord Tomlinson

The provision in the Nice Treaty is not particularly new. It merely regularises a position that has been irregular in the past and has been severely criticised by the European Court of Auditors. The political groups of the European Parliament—all political groups—have been using some of the funds that they receive in a way that has been criticised by the Court of Auditors. None of those groups has emerged without criticism; none has emerged unscathed. This provision creates the very element of a specific budgetary line—with budgetary clarity, transparency and direct accountability—to regularise in the future that which has been irregular in the past.

Lord Biffen

The history of public funding of politics has been miserably unhappy. It has never been accepted with much enthusiasm, certainly not in this country—although one has to accept that it is very much a part of a method of operation. If one confines one's observations to one's domestic experience, there is no doubt that the so-called Short money is probably least subject to critical scrutiny.

When we get beyond that—the point was made by the noble Lord, Lord Tomlinson—there begins to be a somewhat grey area. This was never more dramatically and, in personal terms, tragically demonstrated than in the case of Mr McLeish. So we should all proceed with due caution on these matters.

My sense of caution is reinforced by the whole question of definition. The tradition in this country has never been one of confessional politics. So there has not been a natural partnership between the Christian Democrat parties and the Conservative Party. That is a matter of historical evolution. I do not attach too much significance to it, but it is none the less a pertinent point.

But if we are now considering the matter in the context of European enlargement, and if we accept that Turkey stands just behind the applicant countries—I am grateful to the Minister for correcting himself and saying that Romania is an applicant country—we begin to raise much more serious points. A confessional party in Turkey will be a party inspired by Islamic teaching. This could relate to either the Fazilet Party or to the MHP. Both are significant parties. Both merit a role in the wider and more diverse Europe that we are postulating. Yet it is difficult to see the circumstances in which they could be merged into other European parties without fundamentally denying the tenets by which they stood. Nevertheless, in my view they are as much a part of a diverse Europe as the political parties that we have now established.

I agree that in referring to Turkey I am talking outside the strict limits of applicants. But do we suppose that in this debate we are considering drawing a line with the present applicants, making it more difficult to move thereafter; or do we see that we have opened up a Europe which inevitably will move farther east and farther south? I think that it is the latter. It is a matter of judgment and maturity on our part at least to anticipate that whatever will be resolved for the present applicants will not make it more difficult for the next line of countries which would also like to join. That will be a judgment borne upon us increasingly in the context of what happened on 11th September.

The other anxiety I have concerns not merely the doctrinal judgment as to which parties will be eligible for these funds; it concerns making the whole business watertight so that they do not spill over to the other political activities of the parties involved. That point has been mentioned. I refer to the institutions that exist within the Union. I do not make this point in a hostile sense but I refer to the political culture of France, the political culture of the Christian Democrats in Germany, the political culture in Italy and the political culture in many of those countries which do not make me think that they are much better at organising these matters than we are. I do not think that we have altogether a good record in that area. That is why I plead for a great deal of caution and a great deal of measured judgment in proceeding with these matters.

Lord Pearson of Rannoch

There are so many examples of my complaint as regards this new addition to the treaties that I do not know whether this is the right place to make it. However, this is a classic example of "Euro creep".

The Minister may be aware that one of my favourite sports is stalking. By that I mean stalking deer, not the modern use of the word. The whole secret of stalking is to identify your quarry and to approach it extremely slowly. Whenever it looks at you, you stay absolutely still and pretend you are a rock. You pretend you are something very different. Eventually it puts down its head and goes on grazing and you creep forward again.

The whole process of the treaties on European union resembles that activity. If Members of the Committee would care to invest in volume one of the excellent British Management Data Foundation's Treaty of Nice in Perspective, they will see on page after page how the original Treaty of Rome, through the Single European Act, through the Maastricht treaty, through the Treaty of Amsterdam to the Treaty of Nice is a constant process of Euro creep towards the ever closer union of the peoples of Europe and the European mega state which is the object of this particular exercise.

Article 191—

Lord Tomlinson

I am grateful to the noble Lord for giving way. He complains about this matter being a manifestation of the ever closer union of the peoples of Europe. Is that not what the people of Britain voted for when they voted in a referendum?

Lord Pearson of Rannoch

No, they did not as a matter of fact. When the people of Britain voted in a referendum—I believe the noble Lord may refer to 1975—they voted to stay in what they were assured was a European common market. They were assured by the Prime Minister of the day that no sovereignty was at stake—

Lord Tomlinson

That was based on the Treaty of Rome.

Lord Pearson of Rannoch

That was, indeed, based on the Treaty of Rome. But I imagine the noble Lord will agree that not many people studied the detail of the Treaty of Rome at the time and those who did on the whole probably voted against it. However, there were very few of them. What the people of Britain voted for was a common market, a free trade arrangement, if you like. They certainly did not vote for what they actually got and they certainly did not vote for this kind of Euro creep, to which, if I may, I shall return.

Article 191 was—I do not wish to embarrass my noble friends on the Front Bench—actually introduced in the Maastricht treaty. The first sentence of Article 191 is very important to my argument. It says: Political parties at European level are important as a factor for integration within the Union". The next sentence reads: They contribute to forming a European awareness and to expressing the political will of the citizens of the Union". When that came before us under the Maastricht treaty—which some of us opposed—I thought that it looked dangerous. It was another clear example of the stalker moving forwards a few paces on the ground and not being noticed. We felt that more was to come. We were assured that that was not the case and this was just the usual old Euro-guff and it did not mean anything; it was just an expression of warm European getting together and we could forget it.

That is what we are always told when new advances are put into treaties. They are not supposed to look like advances; as I said earlier, they are supposed to look like a tussock of grass, a rock or something else very innocent.

The Treaty of Amsterdam was good enough to give this issue a miss—there is no hurry in the process, after all—but now we get the Council acting in accordance with the procedure of Article 251, laying down the regulations governing political parties, and so on, to control and organise their funding.

There is no doubt that the measure is another dangerous advance. That is why I support the amendment. I hope that the Minister will be able to assure us that my noble friend's fears are unfounded, but I am not sure that he will be able to convince me.

10.15 p.m.

Baroness Nicholson of Winterbourne

As a Member of the European Parliament, I must say that the gravity with which we treat the Court of Auditors' reports is reflected in our desire to regularise an unhappy situation. It is extremely disconcerting to have such hefty and justifiable criticism from the Court of Auditors. We should congratulate the Court of Auditors and take every possible step to be in a position not to have to be criticised in that way again. This is not the first time. The court's criticisms have been firm and secure and, I believe, wholly justified. The provision is an excellent manoeuvre to enable us to come out of that unhappy situation.

The noble Lord, Lord Howell, asked whether a particular volume of people can have a political identity or political will. We have a European cultural identity—we are Europeans. Of course the different regions, villages, towns and cities have different points of view on different things all the time. That is the diversity of the freedom of our political world. That is what we want; that is the challenge that we have to respond to.

The last thing that any of us wants is for any volume of people to have a single view—a sort of blockbuster view. That would not be politics as we know it—the city, polis, the state—with different points of view coming forward. The people of Europe are represented and their views are reflected—all 350 million of them at this moment—by the Members of the European Parliament.

We had a pathetic turnout in the elections for the European Parliament. Strengthening the capacity of the political parties to communicate better with the electorate on European Union matters can only be welcomed.

Lord Stoddart of Swindon

I have never been in favour of state financing of political parties and I do not believe in it now. The more state and central financing of political parties there is, the further away the electorate are pushed. That has been shown in election after election. I forget how much money was spent at the last election, but I think that it was getting on for £40 million altogether and we got a turnout of 59 per cent.

People are giving all sorts of reasons for that. One is that it is too difficult to vote. I have never found it difficult to vote in my life. I have always found it easy and I have done so with alacrity. It is that alacrity that we must bring out in the electorate. The electorate will vote when they believe that they have something worth voting for. It is because they do not believe that at present that they are not voting and are staying at home. The electorate believe that their vote counts for nothing and that the House of Commons and, indeed, the European Parliament have no say and do not represent them as they believe they should be represented.

There is one cure for that and it is not state financing. State financing will make the matter worse. It will lead to more corruption and people will say, "Well, they are only in it for themselves". Those of us who have been in local government, in the House of the Commons and in the European Parliament have all heard that argument. The more money that the state pushes out, the more that sentiment will be expressed.

The approach must be completely different. It must involve the representatives meeting their constituents, explaining to them truthfully and in words they can understand what they are about, what they are involved in and what it means to them and to their country. All the money in the world is no substitute for that. The greater the centralisation and the more money that is spent centrally, the more contempt the electorate have for the process.

My remedy is for the representatives to get back to their constituencies and to the members of the constituency parties. We should give them back the power that they have lost. We should ensure that local people keep in touch with party members and that they build up their parties. When I joined the Labour Party, it had 1 million members. Now it is lucky if it has 300,000. The Tory party had 3 million members. It is true that some were non-paying; nevertheless, it had 3 million members. At the moment, that number is down to 320,000. It is an absolute disgrace that we have reached that position; it undermines our very democracy. Money, in particular if it is paid by the state, will not cure it.

Therefore, I hope that people who are involved in Europe and in the European Parliament will not go along that road but will go along the road of returning to their constituencies, explaining what it is all about and involving ordinary people in politics. That is the way forward to democracy, and it is the way forward to obtaining support from ordinary British voters.

Lord McIntosh of Haringey

I am slightly confused by the metaphors with which these arguments are advanced. I was perfectly happy with the noble Lord, Lord Howell. and his snark because I was perfectly happy to say that, as soon as he looked at his snark, he would find that it was a boojum, and that it would softly and suddenly vanish away and never be heard of again. I hope that I shall be able to convince him of that. However, not having the faintest idea what stalking is about and, having listened to the noble Lord, Lord Pearson, I do not know whether I am on the side of the deer or the stalker. I rather suspect that I am on the side of the deer.

Lord Pearson of Rannoch

The noble Lord is in fact the stalker and the British people are the hapless herd of deer.

Lord McIntosh of Haringey

Clearly the noble Lord changes sides when he goes north of the Border.

This issue is much simpler than is apparent from this debate. We have had support for European political parties in the treaties since Maastricht. As the noble Baroness, Lady Nicholson, rightly said, the existing method of support for European political parties has been severely criticised by the Court of Auditors, mainly because, although the support is supposed to be for European political parties, of the suspicion—or more than that—that it has leaked to national parties. That seems to us to be a very bad thing. That is why we welcome Article 191, which, using QMV, states that there should be regulations governing political parties at European level—not, of course, national political parties—and in particular, the rules regarding their funding.

Political parties at national level have been around since Walpole and, more significantly, since Eatanswill. European political parties are a relatively new and valuable development. It is hard to imagine how the European Parliament could operate without them; they are growing in importance, and so they should. It is right that there should be collective responsibility among those with like minds in the European Parliament. It is right that people should be able to form parties at European level as well as national level. That is, and historically has been, the view of the major national parties in most—I believe in all—European states, and certainly of those in this country.

However, there is a problem. The political groups with the European Parliament receive money from the European Parliament budget for their day-to-day organisation, and the problem involves leakage to national political parties. That is why the regulation was recommended by the European Court of Auditors to combat financial mismanagement.

That approach has the support of the Party of European Socialists and the Labour Party; the European Liberal, Democrat and Reform Party and the Liberal Democrat Party in this country; and the European People's Party and European Democrats, to which, until recently, the Conservative Party belonged and to which it is still allied. That is why member states are now finalising a suitable regulation that will stop financial abuse. It is doing so under Article 308 of the existing treaty. We support that; we want action as soon as possible to clean up funding.

Nice provides a specific new treaty base and amended Article 191 of the EC Treaty with QMV to ensure that the provisions governing political parties are agreed or, as necessary, updated speedily without allowing one member state to block much-needed reforms. The measures will not finance national parties; that is clearly stated in Declaration 11.

That does not involve "funds for federalism". I am not allowed to call the noble Lord, Lord Pearson, a Europhobe but he is certainly a Europaranoiac—he has been for many years. Everything comes towards federalism. There is no discrimination against parties on the grounds of their attitudes towards the European Union or integration. European political parties that oppose the EU or further integration will be just as eligible as those that think the opposite. That is also explicit in the Nice Treaty. It will not be possible for the proposed regulation to give the EU the power to ban political parties and it will not transfer any power to the Community. The declaration states that the provisions of Article 191 do not imply any transfer of powers to the European Community and do not affect the application of the relevant national constitutional rules.

I do not know whether I want to say more about the Conservative Party. The noble Lord, Lord Howell, referred to the position with a suitable hesitancy. However, I should say that if the Conservative Party wishes to join a European political party, or to form a new one that meets the objective criteria that will be laid down in the regulations, it will be free to do so. I suggest that the objections raised in the debate on this amendment are seriously misconceived.

10.30 p.m.

Lord Howell of Guildford

The Minister is persuasive, but not sufficiently to drive me from all of the amendments to which I spoke earlier.

There was a mess before, and the Bill is an attempt to reduce the mess. But it nevertheless brings the issue into focus in a healthy way. Assertions were made at Nice—and at previous summits—about the essential need to reinvolve national legislatures and parliaments in the shaping of the future European Union—in the flow of decisions; the method of decision-making; and the modernisation of the old Community method. Some of that high rhetoric should be turned into practice.

I make it absolutely clear that I am saying nothing against the value and essential role of the European Parliament and its distinguished Members—one of whom is here this evening—who do immensely valuable work in calling to account the European institutions. Sometimes—as with the worker consultation lower limit—collective decisions are reached that we do not like; sometimes sensible and insightful decisions are reached and proposals made.

However—I think many at the European Parliament would agree with this—that is not by itself enough to fill the growing democratic deficit that lies at the heart of the European Union as we know it today. That deficit is growing. It was recognised in the European Commission's White Paper on governance, which acknowledged that feeling is growing about the entire legitimacy of the European Union. Its democratic procedures are being questioned. A government or great supranational body that cannot say that it commands full support for democratic procedures and show that it operates by them will lose legitimacy.

So we certainly need a European Parliament—it does excellent work—but we need links brought back through national parliaments as well, and by more than words, by deeds also.

We are talking about taxpayers' money. Taxpayers are citizens of the various member states of the Union. It is their money that is being spent and they are entitled to call to account those who are spending that money. That calling to account cannot be done only through the European Parliament, hard-working though it is; national legislatures must also play their part. That is becoming more, not less, true as time passes. It has now become a cliché, an obvious observation, that people are turning away from the political process and from politics and parliaments—national parliaments, let alone supranational bodies—for a number of interesting reasons.

Let us conceive of the world as being organised so that markets work, but only within a political context, so the political context must be right. Let us consider that people have choices in the market, as consumers, where they have a fantastic range of instant satisfactions of their wants; but in politics they find the whole system to be more and more inaccessible and to offer fewer and fewer choices, although they feel more empowered and anxious to make such choices. We then begin to understand why people are turning away from politics—including, in this country at any rate, as has been said in this debate, from voting in European elections.

Lord McIntosh of Haringey

If the noble Lord will allow me to intervene, I was careful not to disagree with my noble friend Lord Stoddart, in particular when he deplored the decline of interest in politics. We all deplore that. It may be that to some extent it can be attributed to the decline in active membership of political parties, and that in turn can be attributed to all sorts of alternative forms of leisure activity.

But it is a bit remote from this amendment to suggest that the existence of European political parties can be attributed to the decline in interest in politics or that it would be made better if there was less funding from the European Parliament of European political parties.

Lord Howell of Guildford

I am talking about the propositions before us; that is, the regulations governing the funding of European-level political parties. I am using this as an example of the sort of thing that, as we survey an increasingly worrying scene, with the loss of interest in political choices—people find that through the marketplace or non-elected bodies they can achieve their aims and obtain decisions faster than they can through politics we should take more seriously. We should ensure that national legislatures—though they do not always command the respect a democrat would like—have a say in how these specific regulations are developed.

Lord McIntosh of Haringey

But surely that can be turned on its head as well. The fact that there are other ways in which we as individuals, as consumers, can achieve our desires in society other than through political parties is part of a wider democracy than purely political parties. That in turn is not a bad thing.

Lord Howell of Guildford

We are getting into very deep water here. I should like to see the political side of the choices of life made more accessible. The noble Lord may think I come from a party that is fanatically keen on markets. But I know perfectly well that markets do not work in a vacuum; they work in a good political framework. If the political framework becomes remote, discredited or unconnected with people voting at the grass roots, then we are all the losers—the market systems, the wealth-creating engines of our societies, the political system and the democratic stability and peace we all want.

I see those issues as all of a piece, and it is important that they are brought back to national parliaments. We have a lot of other ideas for areas where we should return the decision-making of the European Union—or bring it closer—to national parliaments. They must be involved much earlier in the scrutiny of initiatives and to a much greater degree than they are now, otherwise this draining out of legitimacy will continue.

Lord McIntosh of Haringey

Again, there is no conflict between us on this. But there is a conflict in the amendment. Nothing in the provisions of the Treaty of Nice, as proposed here, in any way takes away from the role of national parliaments. Indeed, my noble friend Lady Symons made that very clear in her speech at Second Reading. She spoke of the problems which the Prime Minister identified at Warsaw—the problem of simplifying treaties to make them easier to understand; to improve accountability and transparency; and to involve national parliamentarians.

I hope that the noble Lord, Lord Howell, agrees with that. I would have thought that was common ground between us.

Lord Howell of Guildford

I remain committed to all that will genuinely enhance the role of national parliamentarians and command the respect and trust of the electors that national parliamentarians are involved in the thread of democracy that must run up through the nation state to the European institutions, reinforced of course by the European Parliament That is why I should like to see a more favourable response from the Government to the new clause we to bled. I know we cannot take this to a vote now and I would not want to. But after new Clause 3, Amendment No. 41 is a perfectly reasonable proposition that I hope all those who want to see our democratic institutions enhanced and refreshed will be ready to support.

I have a feeling that I am not going to make much progress with that argument at this time of the night. It is something to which we would like to return later. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Grocott

I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

House adjourned at nineteen minutes before eleven o'clock.